Home Buying in 01970>Question Details

KP, Both Buyer and Seller in 01970

What's the downside of using Redfin for Buy Side Representation?

Asked by KP, 01970 Fri Aug 27, 2010

So I have talked with some people that have used it, read reviews on the web and there does not seem to be a catch - you get 50% of the buyers commission (1.25% to 1.50% of the purchase price) refunded at closing. That is $6000 to $8000 on the type of property in my range. A typical buy-side reator would have to negotiate the price down about $50,000 just to warrant the money coming back using Redfin.

It just seems a little too simple, wanted to know if anyone out there has used them, had a back experience, etc. What are the cons (outside of the typical 'we provide better service' responses) - It seems like a pretty tough pitch for a buy-side agent unless they are willing to share their fee with you - and maybe some are?

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Michael Giles’ answer
Hi KP,
I find it difficult to comment on one specific company and impossible to aswer without sounding defensive. That being said, there are several different business models in our industry, As a Realtor you need to research them and find the one that best fits for you.

As a consumer, you need to do the same. If you have done your homework and are comfortable with the level of service that you will be receiving, then I would move forward.

I won't claim that I provide better service than anyone else, however I will tell you that I take my job seriously. I understand that no two transactions are the same and that their are many rocks to look under where problems can hide. I would be happy to send you a copy of my "due dilligence" checklist that is performed on every home that I list or enter an offer on.

Knowledge of not only the area, market and inventory but also the players involved in a typical local transaction can be a big part of making a transaction less stressful. Other Agents, Inspectors, Appraisers, Local Lenders and City/Town Officials all have their own tendencies and personalities. The more you get to know them, the better prepared you can be to make that little piece of the transaction go smoothly.

For example I have met Jim Armstrong (below) and know several of his agents and I know that his company has a great reputation on the North Shore. For every agent like Jim there is another with the reputation of being difficult, non communicative or less than forth coming with disclosures. It is with these agents that I know I need to take even further steps to assure my client's interests are protected.

Negotiating the price down $50,000 is one way to recover your lack of savings, but uncovering a potential problem that could cut the value of the property more than $50,000 is another way of looking at it.

I was showing property a few years back and my clients fell in love with a house that was the last home on a dead end street. Their favorite feature was the full window wall in the master bedroom overlooking the woods at the end of street. Upon further review of the plot plan for the development done back in the early 50's, we found there were two additional lots of land both owned by the same person that if combined could be a buildable lot. (not disclosed by the listing agent) I tracked down the owner, who happened to be a developer and while they had no immediate plans to build at some point he would either build on it or sell it ot someone who would. This would give my clients a beautiful view of their neighbors house someday and effect the resale value as well. These things happen and can cost you in the long run.

To sum up my defense. I think it's more important that you can work with and trust that your agent is loooking out for your best interest more so than what company they work for or a rebate.

This was a great question that took me some time to think about before responding. Best of Luck!!!!--Mike
6 votes Thank Flag Link Sat Aug 28, 2010
I first contacted Redfin on May 28th and informed them I was interested in listing a property for sale with them. I spoke with their "listing specialist, Klaus Gosma" on June 12th, 2013. Mr. Gosma stated he would view the property 06/14/2013 and report back on 06/17/2013. Today is June 26th and I have heard nothing. Perhaps they should change their name to "Dedfin".
2 votes Thank Flag Link Wed Jun 26, 2013
LOL!
Flag Wed Oct 8, 2014
Not all real estate agents are the same. Redfin is probably better than a bad agent, but doesn't come close to a very good REALTOR. Everyone these days wants closing costs ect. There are other things to negotiate besides money. Sometimes instead of coming down another 500 bucks the owners may leave an expensive pool table that they have no room for or a piano. Everything is negotiable.
2 votes Thank Flag Link Sat Aug 28, 2010
oh, and we offer $ rebates as well ... usually bigger than redfins!
Web Reference: http://territoryre.com
0 votes Thank Flag Link Mon Aug 30, 2010
Flat fee is hard to find - but in our opinion the way a true buyer broker should be paid.

We are the only company in MA that offers it at the moment ... Redfin used to offer a flat fee and then, unfortunately, abandoned their original model. A buyer broker who gets paid a % of the sale price essentially gets paid more money if you pay more money for a home which can often lead to a conflict of interest (same as a "buyer broker" who also takes listings - represents both sides). So the only way to ensure a healthy broker/buyer relationship would be to find an exclusive buyer broker who works on a flat fee. As long as the exclusive buyer broker has a strong history as a great negotiator/broker and you have a good relationship then the fee becomes an added bonus :)

We don't discount our service: http://www.territoryre.com
Web Reference: http://territoryre.com
0 votes Thank Flag Link Mon Aug 30, 2010
Using online sources such as realtor, redfin, trulia, etc. is a great choice as long as you don't rely on the comparisons they provide. Although they come close to being accurate, a Realtor can give you an insight of the inside information that no website can provide. Online sources will almost never know if there has been a crack in the foundation of the property...but a Realtor usually would know! Avoiding such issues could save you a lot of time and stress.
Maybe in a few years, these website could provide accurate information but for now your best route is to ask a realtor for help.
0 votes Thank Flag Link Sat Aug 28, 2010
To Michael Giles: Excellent answer. I can tell you did take the time to really think about this question before submitting an answer. I took the easy way out and just referenced previous answers.

To KP: There is one more point I would like to make, though. A buyer will be asked to fill out an IRS 1099-misc for any rebate or monies received as a result of a home purchase. That means you will have to pay state and federal income taxes on the $6,000 to $8,000. Depending on your tax bracket, you could pay 20%-38% of that to the government. Also, make sure that it doesn't push you up into the next tax bracket or you could lose more money than you save.

Good luck with you home purchase no matter who you employ as your buyer agent.

Jim
0 votes Thank Flag Link Sat Aug 28, 2010
Well Said Michael “I think it's more important that you can work with and trust that your agent is looking out for your best interest , more so than what company they work for or a rebate.”
Dealing with such “rebate” agent can be quite frustrating since the agent most likely does not know the area, does not do their homework, is not present when and where he/she needs to be, does not effectively negotiate since higher the price higher the split, puts extra workload on cooperating agents.
By not doing their job they can not possibly work in the clients’ best interest. You might get a K or few back but at what cost?
0 votes Thank Flag Link Sat Aug 28, 2010
See a similar question asked previously on Trulia.com:
http://www.trulia.com/voices/Tech_Tips/Buy_side_vs_Redfin_re…
0 votes Thank Flag Link Fri Aug 27, 2010
I suppose, as with all things in a free market, the value is in the eye of the beholder.

I am a full service agent and I only work actively with a handful of clients at any given time so that all my clients have the opportunity to get my full attention when they need it. I know my business, my neighborhoods and my inventory. I believe I can save you time and hassle because I know how to negotiate a deal that can close and how to manage a deal that will close.

If all your deals go smoothly, then perhaps you've no need for my expertise. However, should you encounter a hiccup or some other difficulty, it would probably be too late to wish you got a full service agent who can pull you through.
0 votes Thank Flag Link Fri Aug 27, 2010
I think the important thing for a homebuyer, especially a first-timer, is to get the best agent they can, regardless of whether they get a rebate.

Home shopping is different than looking for rentals, where "this'll be fine" is just good enough.

A buyer's agent should know enough about homes to help you find one that fits your lifestyle, help you evaluate the home for livability (not just, here's a bedroom), help you anticipate the quality of the finishes and their place in their life cycle (nice kitchen, but the finishes are pretty cheap for such an expensive house), help you anticipate potential maintenance and repair problems (shake roof vs composition, wood gutters vs vinyl), and the potential for remodeling and improvements (is there a ready place for a stairway if you wanted to build up, for example).

On top of what you would presume are the basics, which is to open the door for you and write up the paperwork.

Oh, and to make sure you're not missing out on a better house than the one you decide on.

I'm sure I could think of more things, but I'll leave that to my colleagues.

All the best,
0 votes Thank Flag Link Fri Aug 27, 2010
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